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Accounting and SMSF expertWed, 06 Mar 2019 01:00:53 +0000en-AUhourly1https://wordpress.org/?v=4.7.13https://sourceaccounting.com.au/wp-content/uploads/2017/06/cropped-logo-icon-32x32.jpgSource Accounting Australiahttps://sourceaccounting.com.au
3232Home-based small business – what can I claim?https://sourceaccounting.com.au/home-based-small-business-can-claim/
https://sourceaccounting.com.au/home-based-small-business-can-claim/#respondFri, 08 Sep 2017 04:43:23 +0000https://sourceaccounting.com.au/?p=883The home is also the principle place of business for many taxpayers these days. Yet it can be confusing to work out what deductions you can claim if you are working from home. Here is a general summary of the typical deductions you can claim: Expenses relating to the area of the home you […]

]]>The home is also the principle place of business for many taxpayers these days. Yet it can be confusing to work out what deductions you can claim if you are working from home. Here is a general summary of the typical deductions you can claim:

Expenses relating to the area of the home you use for business. By determining the area of business space used and dividing this by the total area of your home, you can calculate the percentage for business use. You can then apply this percentage to claim the following deductions:

Occupancy expenses including mortgage interest or rent, council rates, land taxes and house insurance premiums.

Running costs including electricity, gas, business phone and internet costs, cleaning, repairs to plant/equipment, and furniture.

Work-related car and travel expenses incurred when travelling between your home and other places of business. Generally, you cannot claim the cost of any travel between your home and your workplace. However, where your home is your workplace, this rule does not apply. You can potentially claim the following expenses:

The cost of travel from your home-based business to a client’s location

Picking up materials and supplies

Doing the banking

Going to the post office

Seeing your tax agent

It is also recommended that you keep a logbook to record the percentage of business conducted while using your vehicle.

We can assist you with determining what expenses you can deduct in running your home based business right here at Source Accounting.

]]>https://sourceaccounting.com.au/home-based-small-business-can-claim/feed/0Do I need a financial planner?https://sourceaccounting.com.au/need-financial-planner/
https://sourceaccounting.com.au/need-financial-planner/#respondFri, 08 Sep 2017 04:38:53 +0000https://sourceaccounting.com.au/?p=879What a financial planner does – and when it is time to see one. Accountants are fast becoming trusted advisers for many clients, especially if they specialise in superannuation funds. As a result, all accountants must now be covered by an AFS licence to provide a range of services relating to SMSFs, in order to […]

Accountants are fast becoming trusted advisers for many clients, especially if they specialise in superannuation funds. As a result, all accountants must now be covered by an AFS licence to provide a range of services relating to SMSFs, in order to ensure that financial planning services are compliant with the highest industry ethical standards.

However, even though consumers can expect more certainty and confidence from the new certification, it can still be difficult to decide when the right time to see a financial planner is.

Essentially, financial planners can help you choose investment options that maximise your returns and achieve your retirement goals. They will assess your risk profile, and determine what type of investor you are. Once they have completed this assessment, they will try to match investments to suit your investment profile. This involves selecting investments that suit your risk appetite and provide you with a return within your investment timeframe.

If you are older, you may be chasing income in the next few years, so you might be more concerned with protecting your super savings. On the other hand, if you are younger, you might consider higher short-term risk investments that provide strong growth out over the long term.

Professional advice is valuable and recommended, especially as you reach milestones in your life, including: marriage, starting a family, receiving a windfall or an inheritance, and retirement.

The type of advice you need depends on your age, structure and the complexity of your financial situation.

A financial planner will meet with you, assess your structure and goals, and devise an investment strategy or plan. They usually get remunerated both from charging up-front fees for the advice they provide, and from commissions if they sell you investments or insurance.

Prior to committing to any advice the planner gives you, the planner will issue you with a statement of advice. The fees are usually only incurred, once you have signed an authority to proceed.

It is recommended that you discuss your financial advice needs with your accountant in the first instance. They may be able to help you up until a certain point with factual information, and advise you of when it is time for you to see a financial planner.

Source Accounting can assist you with the initial discussions and assess whether you require the services of a financial planner. Call us now on (07) 3394 4622.

]]>https://sourceaccounting.com.au/need-financial-planner/feed/0What services do SMSF administration firms provide?https://sourceaccounting.com.au/services-smsf-administration-firms-provide/
https://sourceaccounting.com.au/services-smsf-administration-firms-provide/#respondFri, 04 Aug 2017 03:32:30 +0000http://sourceaccounting.com.au/?p=851More and more Australians are switching from retail super funds to SMSFs because they offer better control and flexibility. An SMSF administration firm is a company that specialises in providing SMSF trustees with set-up and management services for their fund. Running an SMSF can be problematic and time consuming, but if you need more support, […]

More and more Australians are switching from retail super funds to SMSFs because they offer better control and flexibility. An SMSF administration firm is a company that specialises in providing SMSF trustees with set-up and management services for their fund.

Running an SMSF can be problematic and time consuming, but if you need more support, an SMSF specialist can make your life a whole lot easier.

SMSF administration firms provide the following services to SMSF trustees:

SMSF establishment services.

For an SMSF to have access to concessional tax treatment, it must be set up correctly. A regulation election is submitted to the ATO, along with the fund’s ABN and TFN applications. A specialist SMSF administration firm will assist in ensuring that your fund is set up correctly and is compliant.

Ongoing compliance management

Your specialist SMSF adviser assists you with managing the day-to-day compliance obligations of your SMSF under the law. It is important that the fund is compliant with the ATO rules and regulations at all times. SMSF administration firms typically provide this service to their clients.

Taxation services

There are several annual taxation obligations of SMSFs. This includes the preparation of annual financial statements and tax returns. The fund must also be audited by a separate independent auditor annually. Your SMSF administration firm should not be the auditor of your fund. The ATO regulations require that the auditor is separate and independent. However, your SMSF administrator will typically have an arrangement with an auditor and coordinate this annual audit process on your behalf as required.

Audit services

The role of the auditor is to conduct an independent review of the fund. The review consists of an audit of the amounts disclosed on the fund’s financial statements. It also includes a compliance audit of the fund in accordance with the super law. The auditor is required to sign an independent audit report annually to confirm that the fund is ATO-compliant. If your fund is in breach, the auditor is required to bring the infringements to your attention and report them to the ATO for rectification.

Financial services

Many SMSF administration firms are also licenced to provide financial advice or have relationships with advisers who can provide these services to you.

Financial services may include investment advice including which shares/managed funds to buy and sell. It may also include which investment platforms to use, and advice on which insurance cover is appropriate for your needs.

In choosing an appropriate SMSF administrator, you should consider the following:

The level of involvement you need.

Many administration firms these days have online access only. They don’t have a dedicated call centre, and you can only contact them by email.

The time you have to invest in managing your fund.

If you have the time and are confident enough, you can make the investment and insurance decisions yourself. However, if you do, you may not achieve the returns you expect. In addition, you may end up with insurance that is inappropriate for your circumstances.

The cost of the work they will perform for you.

According to the ATO, the average cost of the administration services associated with SMSFs is around 2.84% of fund assets. This information comes from SMSF annual return data released by the ATO.

With all of the compliance obligations trustees have these days, it is important to not just consider costs alone when making your decision. You should seek the services of an appropriately qualified firm that suits your needs.

Most firms offer a fixed-fee SMSF package that includes the administration, tax return preparation and annual audit of your SMSF. With fees starting from as low as $990 including GST, we can assist you every step of the way. Our SMSF packages include personalised service, access to our SMSF specialist adviser and compliance management. We provide quotes for our services upon request, and a free one-hour initial consultation to assist you in making your financial decisions.

]]>https://sourceaccounting.com.au/services-smsf-administration-firms-provide/feed/0Steps you need to take when setting up your SMSFhttps://sourceaccounting.com.au/steps-need-take-setting-smsf/
https://sourceaccounting.com.au/steps-need-take-setting-smsf/#respondThu, 03 Aug 2017 18:33:16 +0000http://sourceaccounting.com.au/?p=840It is important that you seek the advice of a professional when setting up your SMSF to ensure it is ATO-compliant. Not meeting ATO requirements can cost you your fund’s compliance status before you even start. This can result in you forking out a hefty establishment fee for a super fund that may never get […]

It is important that you seek the advice of a professional when setting up your SMSF to ensure it is ATO-compliant. Not meeting ATO requirements can cost you your fund’s compliance status before you even start. This can result in you forking out a hefty establishment fee for a super fund that may never get off the ground.

In general, there are 11 important steps involved in setting up your SMSF including:

Decide on either an individual or corporate trustee structure for your SMSF.

You need to consider the cost, the way your fund assets are registered, and the complexity of the trust structure that you choose for your SMSF.

Decide on the trustee members and obtain their written consent.

Trustees can be members of either an individual or a corporate trustee structure – each with four members or less.

If a corporate trustee structure is chosen, all members of the SMSF must be directors of the company that is set up as the corporate trustee.

Establish the corporate trustee.

A company trustee will need to be registered separately with ASIC, and an ASIC fee will apply.

Draw up the trust deed.

Set up a bank account.

Open a bank account for the SMSF with a bank of your choice.

Apply for an ABN and tax file number.

This is a separate ATO application. The ATO service standard for issuing ABNs and tax file numbers is up to 28 days. You will need to take this into account when planning your timeframe for the establishment of your SMSF.

]]>https://sourceaccounting.com.au/steps-need-take-setting-smsf/feed/0How to increase your business cash flowhttps://sourceaccounting.com.au/increase-business-cash-flow/
https://sourceaccounting.com.au/increase-business-cash-flow/#respondThu, 13 Jul 2017 07:41:01 +0000http://sourceaccounting.com.au/?p=818The lifeblood of any small business is all in the cash flow. The best way to increase your business cash flow is to have a written cash flow plan and to follow it. We recommend using the following strategies to improve your business cash flow: Work with an accountant that focuses on small business. Use […]

]]>The lifeblood of any small business is all in the cash flow. The best way to increase your business cash flow is to have a written cash flow plan and to follow it. We recommend using the following strategies to improve your business cash flow:

Work with an accountant that focuses on small business.

Use real time software to manage your books such as Xero. This will enable you to have a clear and current picture of your profit and cash flow.

Analyse your cash flow regularly.

Ensure more money is coming into your business:

Establish a clear payment policy and communicate it to your customers.

Offer discounts if your clients pay upfront or early.

Offer multiple payment options such as ezidebit.

Follow up your debtors. Software such as Xero can do this for you automatically by sending your customers email and text reminders.

Think twice before purchasing new items of equipment. Saving a few dollars on tax may not be the best option if your cash flow cannot support the purchase.

Lease equipment instead of purchasing.

Invoice upon provision of service or item without any lag time in between, and encourage upfront payment.

Negotiate better pricing and longer payment terms with suppliers.

Regularly review inventory to ensure that you are not holding too much stock. Consider drop shipping or direct-to-door delivery from your suppliers to your customers.

]]>https://sourceaccounting.com.au/increase-business-cash-flow/feed/0Buying a Property with My SMSFhttps://sourceaccounting.com.au/buying-property-smsf/
Tue, 27 Jun 2017 22:00:28 +0000http://sourceaccounting.com.au/?p=364Setting up a self-managed super fund is a popular choice if you are planning to invest in property. It is actually the only way that you can buy property using your superannuation mone,y and you don’t have to use a single dollar from your own pocket for the entire set up and purchase. Your superannuation […]

]]>Setting up a self-managed super fund is a popular choice if you are planning to invest in property. It is actually the only way that you can buy property using your superannuation mone,y and you don’t have to use a single dollar from your own pocket for the entire set up and purchase. Your superannuation is your money – you just can’t access it until you retire so the entire choice of investments is yours.

You must adhere to a strict set of laws if you want to go down this path. There are two structures that are required to be set up before you sign a contract to purchase your property. The first is the actual self-managed super fund structure. In all cases, the fund should be set up with a company acting as trustee. This is because any lender, whether it be a bank or non-bank lender, will lend you the maximum amount possible using this structure.
The self-managed super fund with corporate trustee is where you will open your fund bank account, and bank all of your superannuation money from other funds and your contributions. It will also receive any income from your investment property, and pay any expenses relating to running your fund.

The second structure is often called the “bare trust”, “custodian trust” or “holding trust”. This trust will also have a corporate trustee, which is also required to maximise the lending capacity of the fund. The bare trust will hold the property title whilst the property is subject to a borrowing.

The reason for this additional structure is that the law requires any borrowing within a superannuation fund to be limited in recourse. This effectively means that in the event that your fund defaults on a loan repayment, the bank can only take possession of the property that is subject to the borrowing. If the fund acquires other assets including shares, managed funds, other properties and opens other bank accounts and term deposits, these are protected from creditors, including banks, if something goes wrong and the fund can’t meet its mortgage repayments.

Some important things to consider before you proceed with the purchase of your property:

You should talk to a licenced financial adviser to ensure that an SMSF is right for you. Accountants can no longer provide you with this type of financial advice without being licenced, so if you are using an accountant, make sure they are qualified to provide you with this service. You will usually need a statement of advice (SOA) from an appropriately qualified person, before proceeding with a borrowing inside a Self-Managed Super Fund. Most banks will request a copy of the advice. Although, accountants that operate under a licence may be able to give you advice in relation to whether a SMSF is right for you, they are not licenced to provide you with advice relating to borrowing inside a super fund.

You should assess whether you will be able to obtain a loan from a bank. Mortgage brokers can assist you with these calculations. In principle, the bank will assess your loan in the same way that they assess all loans. They will look at the fund’s income as well as its assets when deciding whether they will lend you the money. If this income is not sufficient, they will consider your personal income and take personal guarantees from you as a member.

For newly established Funds, the banks will check your superannuation contributions to your existing super account, and count them as income. They will also count rent from the proposed property, along with any other Fund earnings. On top of this, the banks will look at lending a maximum of 80% (based on the property value) for residential property, and 60% to 70% for commercial properties, depending on the lender. In addition, most banks now require a cash reserve, or buffer, once you settle your super fund property purchase. It is usually set at 10%-15% liquidity. The purpose of the buffer is to fund all of the expenses the fund will have post property purchase.

Once you have obtained a pre-assessment, then you would ordinarily go shopping for a property that suites your budget. Remember to take into account the amount of money you will need to pay for the cost of setting up the SMSF and bare trust. You should be able to obtain a quote from most accountants or SMSF providers for the establishment of the structure.

You must, in all cases at all times, have the SMSF and bare trust established before you sign a contract to purchase a property. The super law has strict requirements in this regard, and failure to follow them may result in a breach and the fund may become non-compliant.

If you are confident that you will find a property within a reasonable timeframe, then you may decide to go ahead and set up your structure. The documents themselves will take around 24 hours to set up. However, the fund will require an ABN, a Tax File Number and be registered with the ATO. The ATO service standard for issuing the ABN and TFN is 28 working days. Although in most cases, it happens quicker, you should prepare for this in your overall timeframe.

It is only when you have been issued with the fund’s ABN and TFN that you can ordinarily set up a bank account. You can do this with a bank of your choice. There are also many online-only options such as Macquarie Bank that have cost-effective options. You should also consider setting up the bank account with the bank that will fund your property purchase, as they may offer you an offset facility that will ultimately save you interest on your SMSF mortgage.

There are many rules that you need to follow and an important set of steps. Failure to do so may result in you setting up the wrong structure or purchasing the property in an incorrect name. This will result in the ultimate demise of your super fund. Get it right from the beginning by talking to us first.

]]>Guide to Small Business – Structuring and Taxhttps://sourceaccounting.com.au/guide-to-small-business/
https://sourceaccounting.com.au/guide-to-small-business/#respondMon, 05 Jun 2017 21:57:39 +0000http://adsmarketing.com.au/?p=1Deciding to start your own business can be one of the most exhilarating decisions you will make in your lifetime. The foremost important step is making a decision relating to the type of structure you set up – from which you will run your business. There are typically four types of structures that you can […]

]]>Deciding to start your own business can be one of the most exhilarating decisions you will make in your lifetime. The foremost important step is making a decision relating to the type of structure you set up – from which you will run your business.

There are typically four types of structures that you can use to run your entity. They are:

The Sole Trader

The Partnership

The Company

The Trust

The sole trader

This is the simplest of all the structures. It basically involves obtaining an ABN under your name or a business name of your choice. In essence, running your business as a sole trader means that you are required to disclose all of the revenue you make from your enterprise, and can claim all of the tax deductions relating to generating that income personally.

As a Sole Trader, you will be legally responsible for the entire decision making process. You can still employ people to help you run your business. You will generally be required to complete the business schedule of the individual income tax return – where you will disclose all of the income and expenses of the company. Your profits will be taxed at the individual marginal tax rates.

The Partnership

The partnership is a business structure that involves a number of people running an enterprise jointly. All of the partners are jointly and severally liable for the decisions made in running the partnership. All partners are entitled to their share of the partnership incom, and can claim their share of the partnership expenses.

The partners must keep track of their contributions to the partnership, and their withdrawals via separate entity accounts. Any profits/losses must be distributed based on the partners ownership per the partnership agreement, and then the partners are required to disclose their share of partnership income/expenses in their personal tax returns. Any tax applicable will be paid by the partners personally at their marginal tax rates.

The Company

A company is an entity that exists separately from its owners. By law, a company is treated as a person in its own right. It can take on debts, sue and be sued. The rights and duties of a company are entirely separate from the rights and duties of the directors and shareholders. This adds a layer of protection to the company directors in the event of a legal dispute, provided that the directors have not given personal guarantees.

The company owners are the shareholders, and their ownership is represented by shares which give them the right to vote at member meetings.

From a tax perspective, the company is required to submit its own tax returns and pay tax at the company tax rates. For small business entities, the tax rate is currently set at 28.5%, and for all other entities it is a flat 30%. The income and expenses of the company is entirely separate from the income and expenses of the owners.

The Trust

A trust is a separate legal structure that you can set up to pass the control and management of your business to someone else. There are many types of trusts that you can run in Australia. Typically, businesses are run through a discretionary trading trust. These are often called “family trusts” because they are usually associated with tax planning strategies and asset protection measures for the family members.

In a discretionary trust, a trustee is appointed to manage the day to day running of the trust, and beneficiaries are entitled to the income of the trust. The trustees are bound to follow a set of rules that are contained in the trusts deed, and the income of the Trust is distributed to the beneficiaries that are nominated in the deed. The amount of profit distributed to the beneficiaries is decided by the trustee, and disclosed in the trust’s tax return. The beneficiary is thein required to disclose the income in their personal tax returns, and pay tax at their own marginal tax rates.

Choosing the right structure is the most important decision that you will make, as it will affect the way that you run your business, as well as your tax obligations. You should ensure that you discuss your options with a tax agent prior to going ahead with your structure.

]]>https://sourceaccounting.com.au/guide-to-small-business/feed/0Capital gains tax concessions when selling my businesshttps://sourceaccounting.com.au/capital-gains-tax-concessions-when-selling-my-business/
Mon, 05 Jun 2017 05:11:19 +0000http://sourceaccounting.com.au/?p=370When you sell your business, you may be liable for capital gains tax on the sale. However, there are four small business CGT concessions that can be used to reduce your capital gain on business assets. So long as you meet certain conditions, you can apply for as many concessions as you’re entitled to, until […]

]]>When you sell your business, you may be liable for capital gains tax on the sale. However, there are four small business CGT concessions that can be used to reduce your capital gain on business assets. So long as you meet certain conditions, you can apply for as many concessions as you’re entitled to, until the capital gain is reduced to nil.

The four CGT concessions are:

Small business 15-year exemption

This concession results in no assessable capital gain, when you sell a business asset that has been owned for 15 years, and if you’re aged 55 years or over and are retiring. This exemption also applies if you’re permanently incapacitated.

Small business 50% active asset reduction

By using this concession, you can reduce your capital gain on a business (active) asset by 50%.

Small business retirement exemption

A capital gain from the sale of a business asset will be exempt up to a lifetime limit of $500,000. If you’re under the age of 55, you must pay the exempt amount into a complying superannuation fund or retirement savings account.

Small business roll-over

Defer your capital gain on a small business asset for a year. Under this method, you don’t include the gain in your income until a change in circumstances causes a CGT event to happen – which ‘crystallises’ the gain. For example, when you don’t buy a replacement asset within the required time or you sell the replacement asset.

An active asset may be a tangible asset (such as land) or an intangible asset (such as goodwill). A tangible or intangible asset is a CGT active asset if it is used, or held ready, for use in the course of carrying on a business by: you, your spouse or child under 18 years or your affiliate.

You should assess any capital gains that may be payable by you before you sell your business. We can help you with these calculations, and the steps that you need to take, to get your paperwork in order and ensure that you minimise the tax you pay. Talk to us today!

SUPER CHANGES – FROM 1 JULY, 2017 – RECOMMENDED ACTION!!https://sourceaccounting.com.au/super-changes-1-july-2017-recommended-action/
https://sourceaccounting.com.au/super-changes-1-july-2017-recommended-action/#respondSun, 04 Jun 2017 06:58:37 +0000http://sourceaccounting.com.au/?p=629The end of financial year is fast approaching and we take this opportunity to advise you of the biggest changes in Superannuation in the last decade. From 1 July, 2017, the following changes to the superannuation system will become law: $100,000 annual cap on non-concessional contributions. The bring-forward option is still available for members under […]

]]>The end of financial year is fast approaching and we take this opportunity to advise you of the biggest changes in Superannuation in the last decade.

From 1 July, 2017, the following changes to the superannuation system will become law:

$100,000 annual cap on non-concessional contributions. The bring-forward option is still available for members under 65 years of age (effectively enables contributions of $300,000 over a three year period).

Concessional contributions limit for everyone reduced to $25,000.

Non-concessional contributions restricted to those with less than $1.6m in superannuation. If your combined super balances are more than $1.6 million, you cannot make any further contributions.

Amounts held in pension accounts will be limited to $1.6m with excess balances having to be either removed from superannuation or transferred into an Accumulation Account.

Investment earnings of transition to retirement pensions to be taxed at 15%, the same as super accumulation accounts.

Please note that if you are moving an excess pension balance into an accumulation account, a special capital gains tax (CGT) relief concession will apply to those members with pensions currently in place. The relief effectively entities you to reset the CGT cost base of selected investments to their market value when a pension worth more than $1.6 million is restructured into a pension and an accumulation account.

You do not actually have to sell an investment to be entitled to this CGT relief. However, you must make an election in writing. The election only covers assets that were in pension mode at that time (not on any assets attributable to accumulation balances).

If you do not elect to apply the CGT relief, the effect is that your SMSF will continue to carry the original cost base of the investments after 1 July, 2017.

The effect of this reset is that a tax concession will apply to some of the capital gains when the investments are subsequently sold.

]]>https://sourceaccounting.com.au/super-changes-1-july-2017-recommended-action/feed/0Accessing your Superhttps://sourceaccounting.com.au/accessing-your-super/
https://sourceaccounting.com.au/accessing-your-super/#respondWed, 24 May 2017 13:02:08 +0000http://sourceaccounting.com.au/?p=516When can I access my Super? This is probably one of the top 5 questions that people ask when they think about their Superannuation account. In simple terms, you can only access your superannuation balance if you meet a condition of release. The main condition of release is attaining age 65. However, if you are […]

]]>When can I access my Super? This is probably one of the top 5 questions that people ask when they think about their Superannuation account.

In simple terms, you can only access your superannuation balance if you meet a condition of release. The main condition of release is attaining age 65. However, if you are under 65 years of age, this does not mean that you cannot access your Super. It just means that strict conditions apply.

You can generally access your super money if you satisfy the following conditions:

Attaining age 65.

Reaching your Preservation Age and ceasing employment.

Preservation age is 55 for those born before 1 July, 1960.

For those born after 1 July, 1960 and before 1 July, 1964, preservation age can be 55, 56, 57, 58 or 59 depending on your date of birth.

For those born after 1 July, 1964, preservation age is 60.

Starting a Transition-to-Retirement Pension.

You have unrestricted non-preserved benefits.

Your preserved account balance is worth less than $200.

You are suffering from severe financial hardship and are on Centrelink benefits for a least 26 continuous weeks.

Compassionate grounds.

You are suffering a terminal medical condition.

You are a temporary resident and leave Australia permanently.

You are suffering from a Permanent disability or permanent incapacity.

You are suffering from a temporary incapacity.

Upon death.

In all cases, you must adhere to strict legislative requirements and put the appropriate paperwork in place. If you need to access your Superannuation benefits, call our office today on 07 3394 4622 to discuss your options.